Solve the following equations which involve cash flows.
a. A student is trying to value an internship opportunity for the upcoming summer. The internship will last three months and pay her $2,111.00 at the end of each month. She will also get a “signing” bonus at the beginning of the internship for $525.00. If the student can invest this money in an account that pays 5.76% APR with monthly compounding, what is the value of her account at the end of her internship?
b. A relative has promised to pay you $99.00 today, and he will pay you additional payments every year for the next five years. Each year he will add $76.00 to the previous payment. (So, the payment in year 1 will equal $175.00). You decide to save every dollar you are given and will invest the money in an account paying 5.00% annual interest. How much money will you have accumulated in five years? Keep in mind that you will have six total cash flows to invest.